Setting a new course. 28 August 2015 ASX: SLR ABN:

Transcription

1 Setting a new course 28 August 2015 ASX: SLR ABN:

2 Important notices Disclaimer - Silver Lake Resources Limited ( Silver Lake or the Company ) has prepared this presentation based on information available to it. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of Silver Lake, its directors, employees or agents, advisers, nor any other person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it. This presentation contains general and background information about Silver Lake s activities current as at the date of the presentation and should not be considered to be comprehensive or to comprise all the information that an investor should consider when making an investment decision. The information is provided in summary form, has not been independently verified, and should not be considered to be comprehensive or complete. It should be read solely in conjunction with the oral briefing provided by Silver Lake and all other documents provided to you by Silver Lake. Silver Lake is not responsible for providing updated information and assumes no responsibility todoso. All dollar terms expressed in this presentation are in Australian dollars unless otherwise stated. No offer - This presentation is not an offer, invitation, solicitation or other recommendation with respect to the subscription for, purchase or sale of any security, and neither this presentation nor anything in it shall form the basis of any contract or commitment whatsoever. Forward looking statements - This presentation may contain forward looking statements that are subject to risk factors associated with gold exploration, mining and production businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimations, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory changes, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates. Forward-looking statements, including projections, forecasts and estimates, are provided as a general guide only and should not be relied on as an indication or guarantee of future performance and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Silver Lake. Past performance is not necessarily a guide to future performance and no representation or warranty is made as to the likelihood of achievement or reasonableness of any forward looking statements or other forecast. No investment advice- This presentation is not a financial product, investment advice or a recommendation to acquire Silver Lake securities and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs, and seek legal, taxation and financial advice appropriate to their jurisdiction and circumstances. Silver Lake is not licensed to provide financial product advice in respect of its securities or any other financial products. Cooling off rights do not apply to the acquisition of Silver Lake securities. Silver Lake assumes that the recipient is capable of making its own independent assessment, without reliance on this document, of the information and any potential investment and will conduct its own investigation. The information in this Presentation remains subject to change without notice. Slide 2

3 Silver Lake at a glance: Corporate overview Silver Lake Resources ASX code Share price (21 August 2015) Net asset backing per share SLR A$0.15 A$0.36 Share register composition (30 June 2015) 12 month share price range A$ Shares on issue Options and performance rights Diluted market capitalisation Average daily volume Cash plus bullion (30 June 2015) Listed investments (30 June 2015) million 5.8 million A$76M 2.35 million A$28.9M A$7.6M Debt (30 June 2015) - Gold prepay and stamp duty liability A$16.4M Hedging (July 2015 to September 2016) 100koz at A$1,570/oz Slide 3

4 Silver Lake at a glance: Board and key management Directors Paul Chapman Non-Executive Chairman Retiring effective 30 September 2015 Luke Tonkin Managing Director Appointed Managing Director 20 November 2014 David Quinlivan Non-Executive Director Appointed 25 June 2015; Non-Executive Chairman elect Les Davis Non-Executive Director Appointed 25 May 2007 Brian Kennedy Non-Executive Director Appointed 20 April 2004 David Griffiths Non-Executive Director Appointed 25 May 2007 Senior Management Luke Tonkin Peter Armstrong David Berg Antony Shepherd Matthew O Hara Managing Director Chief Financial Officer and Company Secretary General Counsel and Company Secretary Exploration and Geology Manager General Manager Mount Monger Previous MD roles at Mount GibsonIron and Reed Resources; senior management positions at WMC Resources and Sons of Gwalia. Extensive experience in senior commercial management roles with Normandy Mining, WMC Resources and Newcrest. Corporate and commercial lawyer with 15 years experience across the resources industry and private practice. Extensive senior experience in a variety of exploration and mine geology positions with Barrick Gold. Miningengineer with previous senior mine management roles at Gold Fields (St Ives) and Barrick Australia (Lawlers, Granny Smith). Slide 4

5 Silver Lake at a glance: Our assets Core business Mount Monger Operation FY15 gold sales of 122koz at A$1,331/oz AISC Multiple UG ( g/t Au) and OP ( g/t Au) mines Ore processed through central 1.2Mtpa Randalls mill Resources of 3Moz 1 Au and reserves of 0.38Moz 1 Au Investments Listed Investments Total current market value (30 June 2015) = A$7.6M Primary listed investment is 13.6% stake in Paringa Resources (ASX:PNL) Murchison Operation Non-core assets On care & maintenance from July 2014; sale process underway Resources of 1Moz 1 Au Resources of 39kt copper and 495koz silver 1 Great Southern Project Sale process underway Resources of 1Moz gold, 10Moz silver and 95kt copper 1 1. Refer to Appendix: Resources and Reserves statements Slide 5

6 What we are focussed on Growth in shareholder value SLR has scaled back production to increase cash returns Internally funded exploration strategy to test quality targets in close proximity to existing mines& infrastructure Target high value Daisy repeats to underpin our long term future at Mount Monger Operational excellence Rigorous assessment criteria, processes and reconciliations Establishing the right plan and delivering on it Consistently solid operating performance Financial risk management Strengthening and nurturing the balance sheet A sensible and transparent gold hedging policy Strong cost and productivity performance A measured and conservative approach to the deployment of capital On core assets and only when the balance sheet allows it Cost of production target ceiling A$1,000/oz all-in-sustaining cost (AISC) Low technical risk and rapid payback critical Slide 6

7 What we have done Board and management renewal Made demanding, value-accretive decisions in the Murchison and Great Southern non-core assets Instituted internal technical and project assessment rigour Strengthened the balance sheet Reduced working capital and liquidity pressures No bank debt by June 2016 Self-funded exploration and capital Taken the necessary impairments to align asset book values with market value Re-set the resource base at Mount Monger Updated interpretation of geological data which honours the geology Embedded stringent risk management processes Financial discipline and conservative capital management framework Gold hedging program Reworked the Mount Monger mine plan to focus on shallower and higher tenor deposits Slide 7

8 What we are doing Building operating consistency and delivering a margin Consecutive solid quarters at Mount Monger with AISC now sub A$1,300/oz Investing in new deposits with low capital expenditure requirements Lucky Bay, Rumbles and Santa expected to deliver significant ore feed in FY16 Launched a new and significant exploration strategy at Mount Monger to recapture lower cost base A$15.5m FY16 budget with systematic, gated approach driving phased, risk-weighted spending Targeting Daisy analogues ( repeats ) at shallower levels than current mining with similar ounces per vertical metre Resource conversion continuing to drive short-term production and cashflow baseline Capitalising on embedded value from our non-core assets Sale processes commenced for the Murchison and Great Southern; sale of Lakewood mill Active tenement management to reduce holding costs Allowing the balance sheet rebuild to continue 1,200 1,150 1,100 1,050 1, Daisy Complex mining + processing cost (A$/oz) The potential margin opportunity that exists with delineation of Daisy deposit analogues at shallower levels than current mining with similar ounces per vertical metre. FY09-12 average FY13-15 average Slide 8

9 Our core business: Mount Monger The flagship Daisy Milano mine has produced 511koz since purchased in 2007 Average ounces per vertical metre of 1,658 from the 500m RL to the 700mRL Daisy underground provides stable baseload feed (65-70koz pa recovered gold) Supplemented by Cock-eyed Bob underground and select open pits (Lucky Bay/Santa/Rumbles) in FY16 Further supplementary open pit mines planned for FY17 and beyond Operating under a single mill strategy (1.2Mtpa Randalls plant) Focussed on head grade and margin optimisation High gold recoveries from free milling ores (93-95%) Underground reserve delineation naturally constrained by mineralisation type/orientation and drilling economics Over the past 12 months 20% of Daisy production has been from Inferred Resources Plan view of the Mount Monger Operation Slide 9

10 Our core business: Mount Monger Mount Monger mined tonnage and grade koz Mount Monger recovered gold production FY09 FY10 FY11 FY12 FY13 FY14 FY15 Slide 10

11 Re-setting the resource base Revised Resource and Reserve estimates at Mount Monger (June 2015) reflect: Under investment in Mount Monger exploration and drilling at Daisy Complex over last two years Removal of low grade unconstrained open pit ounces Targeting: 80% Measured & Indicated Resource to Reserve conversion from primary high grade lodes at Daisy Milano 75% Inferred Resource to Indicated Resource conversion for Lower Prospect and Haoma West The revised mineral inventory estimates are key drivers of SLR s mine planning and financial risk management going forward Daisy Milano drilling metres (calendar years) Drilling (m) 30,000 25,000 20,000 15,000 10,000 5, Slide 11

12 The new approach: Santa Area case study Santa Area demonstrates our revised approach to exploration and mine sequencing June 2015 Reserve 32koz Au * June 2015 Resource 403koz Au * Updated resource and reserve estimate reflects the application of appropriate geological constraints to gold distribution assumptions in the geological model The application of constraints to our orebody modelling is an example of how we are honouring the geology across our ore bodies Appropriate feasibility work for the Rumble pit completed well in advance of the decision to mine Drilling to confirm mine plan and geological model resulted in addition of 83.6koz to resources and conversion of 29.3koz from inferred to indicated resource status Requisite metallurgical test work Mining contractor mobilised and ground broken in August 2015 following Board approval * Refer Appendix: Resources & Reserves Statements Slide 12

13 A dynamic, gated exploration program for FY16 Phased and disciplined A$15.5M program with clearly defined hurdles to drilling dollars Best targets proximal to our existing mines and infrastructure: Definition of new, high value resource ounces from near-mine drilling Targeting shallow, high tenor Daisy repeats with similar ounces per vertical metre from highly prospective and untested horizons Based on extensions to known mineralised structures and/or within preferential stratigraphic units, supported by broad spaced drilling results, surface geochem and geophysical data These structures provide for cost effective exploration and low capital intensity of development Resource development drilling extending and converting ounces into the Mount Monger mine plan to replace depletion Upgrade to Indicated Resources and conversion to Reserves Leveraging above and below ground infrastructure via extensional ounces with short development timeframes Sharpen focus on BIF hosted targets in the Mount Belches area Slide 13

14 High value repeat and game changing targets Targets in known gold deposit trends proximal to current operations, identified by recent strategic exploration and geological review Target zones hosted by extensions to existing mineralised structures and/or within preferential stratigraphic units, supported by broad spaced drilling results, surface geochemical anomalies and geophysical data FY16 targets are near surface Shallow, high ounces per vertical metre deposits are key to recapturing AISC of sub A$1,000/oz Significant potential to grow these deposits at depth as illustrated by the history at Daisy Complex Existing infrastructure allows 65% of exploration dollars to be spent in the ground Despite its history, Mount Monger is underexplored Historical reconnaissance exploration and target testing limited due to major drainage system Leslie West Daisy Complex near mine targets Leslie MMO UG Daisy North Daisy Complex Daisy Repeat Lorna North Slide 14

15 A honed approach to repeat structures Leslie target along Bull/Leslie trend South plunging Daisy repeats east of Daisy Complex 500m wide gap between Daisy lodes and Lorna Doone/Spinifex deposits No effective previous drilling of target zone interpreted to plunge south of Daisy Complex between ultramafic contact and the North Fault Dinnie Reggio 500m west of Daisy Complex History of open pit and underground mining Program designed to test step out target of down plunge extensions of known mineralised structures An economic resource would be expected to be accessed from existing underground infrastructure providing a rapid, low risk development profile Leslie target in prospective andesite stratigraphy 1,000m west north west of Daisy Complex Targeting four Daisy/Haoma-style mineralised trends along strike from Dinnie Reggio and Christmas Flats Previously intersected 2m at 36g/t Au and 2m at 24.4g/t Au from Leslie area in relatively shallow position ( 80m depth) * * Previous drilling results Slide 15 Dinnie Reggio target 400m

16 Securing our baseload: The Daisy Complex Slide 16

17 Upgrading Inferred Resources at Daisy Complex Lower Prospect Lode 18 conversion target * Lower Prospect Lode 18 Targeting upgrade of Inferred Resources from 45 Level to 47 Level, mining currently at 42 Level Targeting inclusion in FY17 mine plan Haoma Lode 40 Targeting both resource conversion and extensions to Haoma West north of the north fault Identified ore to be accessed from Haoma West ore drives Haoma West Lode 25 Targeting conversion of Inferred Resource down-plunge from current mining activities Remains open down-plunge with mineralisation intersected below the Inferred Resource envelope 100m Haoma Lode 40 conversion and extension targets * Lode 40 Area 1 Area 2 MIL g/t LP g/t MIL g/t Proposed Holes g/t, g/t, g/t, g/t, * Previous drilling results 100m Stage 1 Holes Stage 2 Holes Slide 17

18 Targeting Resource extensions at Daisy Complex Daisy north of the North Fault Daisy lodes not adequately tested north of the North Fault Haomaand HaomaWest lodes continuity confirmed north of the North Fault Target is 1,500m x 250m zone of prospective andesite stratigraphy Access from current and planned development infrastructure HaomaSouth extension Step-out target down-plunge of Haomaresource adjacent to the ultramafic contact Probe drilling has identified southern extension Lower Prospect northern strike extension Lower Prospect not tested for northern extensions Extend Lower Prospect up-plunge of North Fault * Previous drilling results 100m Daisy north of the North Fault * Area to Test 100m Haoma South extension * g/t g/t g/t Area to Test Slide 18

19 Maxwells: a high priority extension target Completed pit delivered 945kt at 2.7g/t for 81koz >1,000 ounces per vertical metre Strong recent and historical drilling results Extensional testing of known mineralisation below historic open pit in progress Initial program to drill on 30m x 30m spacing from pit floor Targeting development of an exploration decline that delivers low cost ounces and provides the best horizon to drill the western, central and eastern BIFs following similar success at Cock-eyed Bob Existing infrastructure and ready access from the pit deliver potential for mine plan inclusion within six months of resource definition 3 lodes identified Interpreted widths support long hole open stoping DMP approved Mining Proposal BIF hosted mineralisation provides clear marker for effective exploration to test for long term underground potential Maxwells cross section * * Refer ASX Announcement titles Maxwells Exploration dated 28 August 2015 Slide 19

20 Cock-eyed Bob: increasing underground value Three underground mine levels developed to 100m below the base of the remnant open pit Limited drilling below the 345 mining level, historical results include * : 16.2g/t 14.9g/t 11.5g/t FY16 program seeking to increase confidence levels in order to extend mining to the 290 level Resource currently drilled to 345 mining level on 40m x 40m spacing Tighter spaced 20m x 20m drilling to support development to 290 level Cock-eyed Bob drilling targets Extensional Diamond Drill Target Area * Previous drilling results Slide 20

21 Sharpening our focus at Mount Belches Focus on high value BIF hosted targets associated with: Isoclinal fold hinge and limbs in the Maxwells BIF Western limb of Santa/Craze BIF to south of Santa Area Strike length of folded BIF horizon target zone is >2,500m FY16 program targeting identification of shallower up-dip projections of high grade zones using regularly spaced sections of aircore drilling along BIF horizons Flora Dora/West Limb target area Slide 21

22 The Mount Monger outlook Approximately 20% of mined ounces at Daisy Complex in FY15 were derived from Inferred Resources The three year gold production outlook: FY16 guidance: koz FY17 aspirational production: 120koz FY18 aspirational production: 180koz Mount Monger production outlook Slide 22

23 Embedded value in non-core assets and Investments Non-core projects Physical assets Book value (A$M) 30 June 2015 Murchison Operation 1 Moz gold resource, 1.2Mtpa processing plant and associated infrastructure 39kt copper resource & 0.5Moz silver resource 14.7 Great Southern Project 1Moz gold resource 10Moz silver resource 95kt copper resource 8.0 Listed investments Shares (million) % interest Market value (A$M) 30 June 2015 Paringa Resources (ASX: PNL) % 6.9 Southern Gold (ASX: SAU) % 0.4 Musgrave Minerals (ASX: MGV) 5.5 5% 0.3 Slide 23

24 Setting a new course in FY16 Gold production guidance of koz Base load ore feed from the Daisy underground complex supplemented by Cock-eyed Bob underground and the Lucky Bay, Rumbles and Santa Area open pit mines New mine development expected to commence at Imperial/Majestic Targeted ore feed contribution from H1 FY17 Total forecast capital expenditure of A$22.5M Daisy Complex capital development - A$18.0M (FY15: A$17.1M) Majestic/Imperial capital development - A$2.2M Capital works - A$2.3M Exploration budget of A$15.5M focussed on identifying game changing Daisy repeats, resource conversion and extensional drilling Strategic exploration review identified a suite of high value targets 84koz gold forward sold in FY16 at an average price of A1,565/oz(represents 65% of guidance mid-point) Further balance sheet improvement expected at current A$ gold spot price Operating cash flow forecast to exceed capital expenditure, exploration and current debt repayments (A$6.5m gold prepay and A$3.8m stamp duty liability) A process to realise inherent value for the Murchison Operation and Great Southern Project commenced Slide 24

25 Appendix: Resources and Reserves statements

26 Mineral Resource Statement as at 30 June 2015 Mount Monger Operation Gold Mineral Resources as at 30 June 2015 Slide 26

27 Mineral Resource Statement as at 30 June 2015 Murchison Operation Gold Mineral Resources as at 30 June 2015 Great Southern Project Gold Mineral Resources as at 30 June 2015 Slide 27

28 Mineral Resource Statement as at 30 June 2015 Ore Reserves Statement as at 30 June 2015 Silver Lake Base Metals and Silver Mineral Resources as at 30 June 2015 Silver Lake Base Metal and Silver Ore Reserves as at 30 June 2015 Slide 28

29 Ore Reserves Statement as at 30 June 2015 Silver Lake Gold Ore Reserves as of 30 June 2015 Slide 29

30 Competent person requirements The Mineral Resource and Ore Reserves estimates for the Daisy Complex (excluding Dinnie Reggio and Christmas Flats), Lorna Doone, Wombola Dam, Maxwells, Santa Area, Cock-eyed Bob, Lucky Bay, Rumbles, Caustons, Tuckabianna, TMC/Katies, Pinnacles and Lena are produced in accordance with the 2012 Edition of the Australian Code for Reporting of Mineral Resources and Ore Reserves (the 2012 JORCCode). All other Mineral Resource and Ore Reserves estimates were first prepared and disclosed under the 2004 edition of the JORC Code and have not been updated since to comply with the 2012 JORC Code on the basis that the information has not materially changed since it was last reported. The information in this presentation that relates to Mineral Resources and Ore Reserves has been extracted from the ASX Announcement entitled Mineral Resources and Ore reserves Update dated 28 August 2015 which is available to view at The Company confirms that it is not aware of any new information or data that materially affects the information included in the original ASX announcements and that all material assumptions and technical parameters underpinning the estimates in the ASX announcement continue to apply and have not materially changed. The information in this presentation that relates to Exploration Results is based on information compiled by Mr Antony Shepherd, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Shepherd is a full time employee of Silver Lake Resources Ltd and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Shepherd consents to the inclusion in the presentation of the mattersbasedonhisinformationintheformandcontextinwhichitappears. Slide 30